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January 21, 2020 12:45 PM, EST

Meritor Acquires Transportation Power

Chris Villavarayan Promoted to COO
Meritor booth at industry showJohn Sommers II for Transport Topics

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Meritor Inc. has acquired all the outstanding common shares of Transportation Power Inc., a company focused on developing electrical drive systems and related technology for manufacturers of trucks, school buses, refuse vehicles and terminal tractors. Terms were not disclosed.

Separately, Meritor announced Chris Villavarayan has been promoted to chief operating officer, effective immediately.

“Meritor has had a stake in TransPower since November 2017 when we began investing in the company to accelerate our path into electrification,” T.J. Reed, vice president of global electrification, told Transport Topics. “Since that time, Meritor has increased its investment in TransPower with the goal of developing controls for its eAxle, as well as the commercialization of electric-vehicle system solutions.”

The acquisition of Escondido, Calif.-based TransPower also supports the expansion of Meritor’s Blue Horizon brand, which represents the company’s emerging platform of advanced technologies centered on electrification, he said.

“Meritor had invested $12 million in four transactions in TransPower as the companies collaborated on many electrification projects,” Reed added.

Meritor reported that through fiscal 2019 it had 22 electrification programs with global manufacturers for a total of 130 fully electric medium- and heavy-duty commercial trucks to be on the road through 2020. It also expanded electric drivetrain products to include the 12Xe for Classes 4-7 and the 17Xe for heavy-duty 4 × 2 and 6 × 2 trucks.

Meanwhile, Villavarayan most recently served as president of Meritor’s Global Truck segment, a post he has held since January 2018.

He will have global operating responsibility for both of Meritor’s business segments — Global Truck plus aftermarket, industrial and trailer — and will continue to report to CEO Jay Craig.

Meritor noted in its strategic plan M2022 that 90% of growth is expected to be outside of traditional North American and European linehaul applications.

In an interview with Transport Topics in 2018, Villavarayan said, “Investments in advanced driver safety systems, autonomous vehicles and e-mobility [for example] are so large and drive such scale, you are driven even more to being global.”

Looking at 2020, Meritor expects most of its markets to be lower in 2020.

“Our forecast for sales is expected to be in the range of $3.7 billion to $3.8 billion,” Chief Financial Officer Carl Anderson said during the company’s fourth-quarter earnings call.

For fiscal 2019, which ended Sept. 30, Meritor posted revenue of $4.3 billion compared with $4.17 billion in the prior period.

The company also reported it anticipates ending an aftermarket distribution agreement with Wabco in the second quarter of its fiscal year, resulting in about a $75 million revenue headwind in the second half of the year.

Headwinds from foreign exchange, Meritor estimated, would be $50 million to $75 million.

Offsetting both of those factors will be a full year of revenue from AxleTech, an acquisition Meritor completed in July. AxleTech has a complementary product portfolio, including a full line of independent suspensions, axles, braking solutions and drivetrain components. AxleTech will operates within Meritor’s aftermarket, industrial and trailer segment.

Troy, Mich.-based Meritor is a global supplier of drivetrain, mobility, braking and aftermarket products for commercial vehicle and industrial markets. Its principal products are axles, suspension systems, drivelines and brakes.

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